This report explores the impact of wage increases on statewide economic activity through a study of the potential impacts of increasing wages for state-paid home care workers in Washington state to $15 per hour. The report also analyzes the potential local economic impact of this wage increase on five counties: Adams, Clark, Cowlitz, King, and Spokane. In Washington state, public home care workers are paid through the state Medicaid program to provide support for seniors and people with disabilities to remain in their homes. Home care is provided either by an individual worker who directly contracts with the state, known as an “individual provider,” or workers hired by private home care agencies. The analysis in this report focuses on the 34,686 state-paid individual provider home care workers for which detailed wage data is readily available from Service Employees International Union 775, the union that represents these workers. A $15 minimum wage for home care workers would impact 81 percent of the state’s individual provider workforce. The economic analysis in this report is focused on the impact and projected spending on workers – for wage increases up to $15 per hour.
This November, Maine voters will consider a ballot question that would raise the state minimum wage incrementally to $12 an hour by 2020 and gradually increase the subminimum wage for tipped workers until it equals the minimum wage for non-tipped workers by 2026. The Maine Center for Economic Policy analyzed the potential immediate and longterm impacts of this ballot initiative and concludes that raising Maine’s minimum wage will have positive net impacts for workers, businesses, and Maine families.
Every three months, the ADP Research Institute releases its Workforce Vitality Index, a measure of private sector job and wage growth. For the past two quarters, Washington state has led the nation in growing jobs and boosting wages, far outpacing the national average and such states as Texas, Florida, and California.
Why does this matter? Because Washington state has one of the highest minimum wages in the nation at $9.47 an hour. And since April 2015, the city of Seattle has been moving towards a $15 minimum wage, with the current minimum ranging from $10.50 to $13 depending on employer size. As the Workforce Vitality Index shows, businesses in Seattle and Washington state are thriving and generating more employment. Seattle’s restaurant industry — which fought the wage laws fiercely — is continuing to add jobs.
The simple explanation is laid out by Nick Hanauer, a successful entrepreneur and venture capitalist from Washington state, in an insightful article in The American Prospect magazine titled “Confronting the Parasite Economy.” Hanauer argues that paying workers decent wages is good for business and good for the economy as a whole. He writes, “When workers have more money, businesses have more customers. And when businesses have more customers, they create more jobs.” To take the restaurant industry as an example, higher wages lead to more disposable income that workers and their families can spend on eating out in restaurants.
Higher minimum would help 88,000 workers and boost consumer spending.